CIT Group Inc., which succeeded earlier this week in staving off bankruptcy by securing an emergency loan from its creditors, intends to restructure "to a shadow of its formal self," the Wall Street Journal reported.
In documents filed with the Securities and Exchange Commission, CIT said that it had agreed to pay its most recent creditors an interest rate of at least 13 percent - higher than the 10.5 percent previously reported.
The company is paying 5 percent on the $2.3 billion in taxpayer capital it received earlier this year under the Troubled Asset Relief Program.
These mounting debt obligations have forced the company to begin evaluating ways to quickly raise cash and reduce its obligations. Earlier this week it began a debt repurchasing program, offering up to $850 for bonds worth $1,000. Overall, CIT will face $10 billion in debt payments through 2010.
Selling assets is one of the company's most obvious choices, experts said. CIT owns a bank in Utah, and regulators have raised major concerns about its ability to maintain sufficient capital ratios. Last week the Federal Deposit Insurance Corp. issued a cease and desist order limiting its ability to pay out dividends and sell certain financial instruments.
CIT also owns railcar- and aircraft-leasing companies, both of which could be unloaded without considerable trouble. It might also sell its business of providing cash advances to manufacturers and retailers, the Journal reported.
CIT's shares fell 22 percent on Tuesday, closing at 98 cents. The stock lost a further 11 percent Wednesday, ending the day at 87 cents. In its most recent SEC filing, it said it would post a second-quarter loss of more than $1.5 billion.
In documents filed with the Securities and Exchange Commission, CIT said that it had agreed to pay its most recent creditors an interest rate of at least 13 percent - higher than the 10.5 percent previously reported.
The company is paying 5 percent on the $2.3 billion in taxpayer capital it received earlier this year under the Troubled Asset Relief Program.
These mounting debt obligations have forced the company to begin evaluating ways to quickly raise cash and reduce its obligations. Earlier this week it began a debt repurchasing program, offering up to $850 for bonds worth $1,000. Overall, CIT will face $10 billion in debt payments through 2010.
Selling assets is one of the company's most obvious choices, experts said. CIT owns a bank in Utah, and regulators have raised major concerns about its ability to maintain sufficient capital ratios. Last week the Federal Deposit Insurance Corp. issued a cease and desist order limiting its ability to pay out dividends and sell certain financial instruments.
CIT also owns railcar- and aircraft-leasing companies, both of which could be unloaded without considerable trouble. It might also sell its business of providing cash advances to manufacturers and retailers, the Journal reported.
CIT's shares fell 22 percent on Tuesday, closing at 98 cents. The stock lost a further 11 percent Wednesday, ending the day at 87 cents. In its most recent SEC filing, it said it would post a second-quarter loss of more than $1.5 billion.
published July 22, 2009, 0 Comments
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